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Finra Exam SIE Topic 2 Question 10 Discussion
Actual exam question for
Finra's
SIE exam
Question #: 10
Topic #: 2
[All SIE Questions]
Topic #: 2
In a rising interest rate environment, which of the following statements is true regarding the price of fixed-rate corporate bonds?
Suggested Answer:
D
When interest rates rise, the price of fixed-rate corporate bonds falls because the bond's coupon payments become less attractive compared to new bonds issued at higher rates.
D is correct as bond prices move inversely to interest rates.
A is incorrect because bond prices fluctuate with interest rate changes.
B is incorrect because bond prices revert to par only at maturity.
C is incorrect because prices do not appreciate when rates rise.
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